Bare trusts

[dash]

Some time ago, I was advised to set up accounts in the form of bare trusts to fund my childrens education.
What I was not made aware of at the time, is that ownership of the funds inside these trusts would pass onto the children at the age of 18.

We are in the fortunate position of the trusts having performed well, and on current expenditures, it is very unlikely we will be able to run down the funds in these trusts by the time the children reach the age of 18.

Can somebody clarify for me what constiutes allowable expenditure on behalf of the children (other than school fees) ?

Would there be any tax or other implications on moving the funds back out of trust and into my wife's or my own personal accounts ? Are there any other options for retaining control of the way funds in the trusts are released ?

[wamstax]

I assume that you are returning the interest on your personal tax returns if it exceeds £100 per annum
regards
bill@wamstaxltd.com

[Lee Young]

What the trustees can spend on the children depends on what they view tobe in the children's interest. No prescriptive list, just common sense. When the child reaches 18 would he or she agree with what the money was spent on? If not perhaps it is not appropriate.

The money can not (at least legally) be moved back into your names. That would be fraud and the child could sue when he or she reaches 18.

Who set upo the trust for you? Perhaps the advice was negligent? Sue the solicitor?

[maths]

It is correct that at age 18 the beneficiary can call for the trust fund.

However, it is also possible for a power of advancement to be exercised by the trustee which would defer the beneficiary's right to call for the fund at 18 (at least 50% if not 100% of the fund).

Alternatively (although perhaps less useful) it is possible for the beneficiary to agree with the trustees not take the fund until a later age is reached.